Crime commission hits foreign property buyers

By Leith van Onselen

The noose is tightening on foreigners laundering money into Australian property, with the Australian Crime Commission (ACC) questioning real estate agents in expensive Melbourne eastern suburb locations, which are known to be hotspots for overseas buyers. From The AFR:

“They’re concerned about how they’re moving the money into Australia, and they know property is one of those purchases that can absorb a huge amount of money, very very quickly,” a South Yarra-based property agent said.

“But they’re also asking how these deals are being done”…

The Australian Crime Commission said since December it had been involved in an investigation focusing on real estate and the role it played in hiding illegal foreign funds…

Information found during the ACC investigation will be shared with the Foreign Investment Review Board and other law enforcement agencies.

This is great news and, along with the Government’s tightening of the foreign ownership regime, should hopefully help to stem the flow of foreign investment into established dwellings.

Just last week I had a 15 minute conversation with a real estate agent that works in Melbourne’s inner east. When I asked whether foreigners were have much of an impact on the property market the agent responded “absolutely massive” and then went on to explain how there were a lot of funny deals going on. He also told me to check-out Glen Waverley, where he said the impact from Chinese money had been particularly extreme, along with some locations in the Boroondara local government area.

The evidence is there, all the authorities have to do look.

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  1. This is what is needed. Real enforcement.

    Capital is leaving China en-masse and a chunk of it is ending up here to the detriment of the Australian community.

    • flyingfoxMEMBER

      Capital is leaving China en-masse and a chunk of it is ending up here to the detriment of the Australian community.

      I think that should be in past tense. What we have witnessed was the smart money leaving. It is about to be slowed heavily by the Chinese Gov.

      • I don’t blame them for wanting to move funds and diversify into a democratic country. I would do the same if I had the means to do so.
        The fact that they can overpay is by and large a simple inflation issue, though many people do clip the ticket to allow it to happen.

      • flyingfoxMEMBER


        Neither do I. But the question is not one of morality but one of legality. If the money if form proceeds of crime or corruption or they have broken the law of Australia in procuring said houses, then the law must be enforced as it would be if you, a citizen of Australia committed said crimes here or if you broke foreign investment laws overseas.

        Nothing stopping them from parking USD, AUD etc in our banks or bonds etc etc….

      • There must be something stopping them parking the funds in Aussie or us bonds because otherwise that’s what they would do. Too transparent maybe?

      • flyingfoxMEMBER

        There must be something stopping them parking the funds in Aussie or us bonds because otherwise that’s what they would do. Too transparent maybe?


      • flyingfox,

        Yes agree. Million dollar question is how much of the buying is dirty money?

        For my own personal sake I’d like it to continue a little longer, even though first home buyers are being thrown under a bus.

        Talk of cracking down on corruption, in my mind, would quicken the outflow of capital rather than slow it. As in, a flood could be coming.

      • flyingfoxMEMBER

        Yes agree. Million dollar question is how much of the buying is dirty money?

        It doesn’t matter…our foreign investment laws forbid it regardless of clean or dirty money.

        Talk of cracking down on corruption, in my mind, would quicken the outflow of capital rather than slow it. As in, a flood could be coming.

        Matter of opinion. Personally I think the flood we saw was the worst of it and as the economy there gets worse, it will become harder to liquidate.

      • Many ways to skin a cat, I guess. I mean, if someone has a sister who is a PR – they buy via them, etc. There are many ways around it, if the money is not focus of a police investigation. Even paying in China into a Chinese bank account, with subsequent 3rd Party investment in Australia.

        It’s like they say “you can’t develop property in your SMSF” but if you use an unit trust structure you can, etc.

        I base my opinion on what I’m hearing from Migration agent sources; being the expectation of increased flows. With the lower AUD being a strong influence.

      • flyingfoxMEMBER

        I base my opinion on what I’m hearing from Migration agent sources;

        You mean like the miners were telling us about endless booms only a couple of years ago.

        Edit: Yes there are many ways around but if we stop the blatantly obvious ones, most will start reconsidering.

      • They will try and stop it, but the question is can they stop it when the political and business elites themselves are the ones moving large quantities of money abroad.

        The political/business elites have enough guanxi to evade any capital controls and hold a giant chunk of the savings in the Chinese economy.

    • “Real enforcement”? lol
      Has anyone been charged? No
      Has one prosecution commenced? No
      Has a comprehensive and independent audit of residential titleholders for FIRB compliance been conducted? No
      Is there anything preventing an unapproved foreign national from buying an existing Australian dwelling in their own name? No
      Do we know how many Australian dwellings are owned by foreign nationals? No
      Do we know if all the titleholding TVH’s that have left the country have sold their existing dwellings as required? No
      Is “Asleep at the wheel” Brian Wilson still Chair of the FIRB. Yep

      • Sad but I have to +1 also, it’s all talk and talk is cheap. Until I see people actually being prosecuted and properties forced to sell at fire sale prices / divestment orders sent out en-masse, I won’t believe any of it.

        You just have to look at the crazy prices being paid in places like Glen Waverly (I mean WTF!) to know something ain’t right…

    • No nothing like miners imo. A miner is not a judge of end user sentiment.
      If specific agents tell me ‘I feel capital flow is getting stronger’ I believe it, or if they say ‘I have a potential PIV client, because they want to move quickly and money is no object’…

      It may have peaked, but I think not.

    • Well hopefully these events of the last couple of weeks put enough sand in the wheels, and spook enough foreign buyers & RE Agents to have a material effect on the market.

    • Neither.

      Until we see some REAL ACTION from either the FIRB or APRA all of this is just shoutnig and screaching, as always.

      So its more likely a black cockatoo.

      • The crime commission are far better equipped to deal with law enforcement than either if those bodies especially FIRB.

      • @StatSailor

        This has been going on for YEARS. Have you SEEN any dealings so far ?


        And they are handing over their findings to the FIRB – wow.

        And the best people to deal with ALL OF THIS are the Tax Office, easily the most powerful statutory body in this country for this type of thing.

        Joe mentioned it – then brought up super as debt for housing to quickly run away in a puff of smoke from his ridiculous talk of FIRB enforcement.

        There will be no enforcement. Get with it people.

      • I take the report above to mean the acc is investigating money laundering – FIRB has no jurisdiction there. The real best people are AFP but they are busy shopping Australians to foreign crime agencies I guess. When they AFP are involved then they are really serious. Before then not so much. FIRB do compliance only – no investigative powers or capability.

  2. flyingfoxMEMBER

    I rent very close to Glen Waverly and it is very obvious that foreign money has had a huge impact in the 3 years I have been here.

    Glen Waverly is now as expensive as if not more so than more blue chip inner suburbs such as Glen Iris and Camberwell. Also almost on par with seaside suburbs such as Hampton.

    I understand that there are great schools around but the price difference will easily pay for private schools and probably uni as well.

    • flyingfox,

      That’s true. It’s crazy isn’t it? In a way I’m happy to see it, many folk have sold out at great profits – only to move to a better area and pocket the difference.

      I don’t see this having as big an impact as people think; most corruption investigations coming from China are political. If anything I see the cash flood becoming stronger if they attempt to crack down. It’s like bankruptcy, if you add another layer of complexity and separation it’s harder for those hunting the funds to succeed.

    • yep, I’ve been in Glen Waverley for a decade or so and the level of Asian ‘investment’ has made it practically endemic to the area, though I can’t say whether this is foreign or new citizens from Asia. I suspect the former plays a big role.

      • My kids go to a Primary School in Mount Waverley (where the Chinese go when they are priced out of Glen Waverley by other Chinese) and the school and its teachers are struggling to deal with the four or five Chinese kids in each class who have poor English skills and little to no respect for the plump white woman at the front trying to teach the other kids stuff. And these are just the “normal” Chinese kids. The parents of Chinese kids with real learning difficulties are putting them into the area’s private schools like Wesley thinking they will get additional help, but the teachers there are under even more strain. It would be hilarious if it didn’t mean the demise of the best working-class region in Melbourne.

    • Schools.

      I used to live in Hampton (family goes back a few generations in Hampton Sandy and Brighton), and GW getting close! Which is shocking, giving Hampton’s aspect and location.

      Again, though, schools.

      Also, anywhere around McKinnon.

      • Marshy,

        I live very close by. The schools only explain a small part of it — in fact the price rises can more than offset the cost of private schools. That is, you can buy somewhere else and send the kids to good private school, it would still be cheaper than buying there.

      • True Coolnik, of Hampton (St Leonards, Hailebury, St Bedes etc), I meant public school catchment areas.

      • They don’t think the premium on the house is an expense. They figured that they could sell the house when the kids finish school and get the money back.

      • I was looking at a house in Glen Huntly (3 bedroom etc..) because I went to school in that area also and think it’s a good spot. It was originally listed at 620,000 AU (which I was considering), but by the time it went to auction it sold for 970,000 AU – McKinnon, Glen Eira, Caulfield Grammar school etc.. I guess that’s what drove the prices up?

        Seems crazy, I grew up on those areas and would have no hope to buy there now. Not even something very humble and modest.

  3. Why has it taken 7 years for this to start happening?! Why didn’t Labor put all this in place before they decided to meddle with foreign investment rules? Why didn’t the Liberals push for this when they were in opposition? Useless…all of them.

    • “The evidence is there, all the authorities have to do look.”

      Which is not happening.

      There is no regulatory enforcement in this country – the only thing that happens is a LOT of hot air the very occasional gesture of enforcement to keep up appearances.

      Its an absolute JOKE.

    • The impetus to act has most likely come from operation fox hunt. Hopefully Australia’s willingness to cooperate results in a few extraditions and the executions that follow send a message to the rest of them. The corruption and flight of China’s elites, not only undermines their nation’s progress, it threatens the stability of the global economy, distorts house prices in countries affected and deprives locals of a home. They deserve what’s coming.

      • flyingfoxMEMBER

        Indeed. I liked the guy and a lot of what he did was in the right spirit but this was definitely not. Especially when it comes to farmland etc.

  4. If the ACC wants to get really busy they should look into Chatswood and surrounding areas in Sydney.

    They would not have enough staff to deal with what’s going on there.

    • Why would they have a look ?

      Are you kidding ?

      Best we just say we are looking, and make the occasional token gesture rather than risk our hard fought folios.

      No chance.

      Same as APRA and everything else. Regulation is COMMUNISM.

    • Sydney’s east, basically ever house north of 5 mill. Imagine If they added a little incentive re this issue, it would be lambs to a slaughter times 10. Everyone knows how it’s being done.

  5. They will need to build more prisons if the continue like this. Should help with the Capex cliff too

    • Grafton crying for jail reopening.

      Here’s the impetus.

      Completely populated by foreign nationals and real estate agents and other complicit parties.

      The local citizenry might have to up their cafe, restaurant and hotel game to cope with the influx of BMWs and Mercs carrying prison visitors.

      • Well there’s 8 full timers plus however many part timers at FIRB that have been stealing oxygen for many years…

  6. This has been a well known fact in other property hot spots like London for quite some time. Foreigners laundering/stashing billions in OS property markets with soft law enforement!

    I recently read about efforts by the Chinese government working with Australian authorities to get billions back from corrupt Chinese officials who had stashed the money in Sydney property…. But it’s not an immediate win because a) the money has been transferred into their kids names b) as the bent Chinese who stole the cash may face the death penalty back home, the bleeding heart Australian bureaucrats can’t facilitate extradition….. according to Australian law!

    It sounds entirely possible our city property prices have spiralled out of control because we effectively have no extradition treaty with China…. isn’t that why Ronnie Biggs went to Brazil? Australia is now an off-shore haven for money laundering…

    • But, that says the market is completely hollow?

      I was told that in Straya, we’ve solved the ‘bubble pop’ problem, because we have legions of genius IP-loan brokers, RE agents, Treasury Heads, philosopher Ministers and A-grade stewards at the RBA. Not to mention better quality houses. (Bricks are harder in Straya, thats a fact)

      The ACC dont muck around 😉

      All over the country, right now, there are squishy brown things staining RE agents underwear.

    • ” b) as the bent Chinese who stole the cash may face the death penalty back home, the bleeding heart Australian bureaucrats can’t facilitate extradition….. according to Australian law! ”

      All the Chinese need to do is guarantee that anyone extradited won’t face the death penalty. Easily done if they do want anyone extradited.

      • Exactly. Though they are some of the nastiest criminals. A bit of murder to hide their corruption is not unheard of.

      • There are enough agreements in place to ensure extradition. Chinese authorities will have to make some implicit promises surrounding death penalty but like our firb, a mere formality. This a serious existential problem for China. They are coming down hard on corrupt officials, and they have to, even if it requires pursuing them in host countries. Others will quickly learn that you can run but not hide. Our politicians have no option other than cooperate with Beijing.

      • “The Chinese extradite on a lesser charge then ‘discover’ the big one when they have the criminal in their hands.”

        That would only work once.

        My understanding is that we won’t extradite if we believe that the person being extradited will face the death penalty at all, not just for the offence they are being extradited for.

        I don’t think even Abbott (guided by Bishop who at least has some brains) would be stupid enough to let it happen twice.

      • @dc,

        Of course they do but all the Australian government needs is plausible deniability or just deniability plain and simple. So we hand them over, the Chinese add an extra round of investigations to the process then they shoot them. Win/ win. As long as they shoot them for something else.

  7. “The evidence is there, all the authorities have to do look.”

    But will they look in the right place. A friend was talking about an ongoing inquiry into the department he works in. Everybody knows the wrongdoings and the responsible parties but no one wants to ask the questions to nail them.

    • My friend that is exactly how corporate fraud is played in Australia. You have an enquiry that takes months but don’t ask any of the right questions. Which results in insufficient evidence to prosecute.
      Just look at the RBA note printing scandal how those directors are walking around as free men is beyond me. But when you send in the feds and they dont ask any relevant questions there will never be any evidence of wrong doing

    • Pressure is building.

      I’m with Mr Collyer above. This is a candidate event – it could be a swan, or a budgie, history will tell.

      But one thing’s for certain – it is Black.

      • “I’m with Mr Collyer above. This is a candidate event – it could be a swan, or a budgie, history will tell.”

        I don’t doubt the potential significance but it’s certainly not a black swan.

        That’s an event that no-one could possibly have anticipated…which the drying up of foreigners wanting to overpay for our housing certainly is not.

      • Abbott announces a zero-tolerance policy on Chinese buyers during a special appearance on Q&A in front of a 40% Liberal voting Chinese audience, with Julie Bishop taking the initiative the next day and blacking up with some shoe polish and gunning down Chinese buyers at an auction in Malcolm Turnbull’s electorate. Turnbull emphasises to Alan Jones in a radio interview the following morning that the government is right to take strong and decisive action, and that the Chinese in this country shouldn’t take for granted that they will be free from the threat of violent action from Cabinet ministers or other Australians while they continue to buy property in this country. Penny Wong concedes that the Australian public are looking for leadership on this issue, and that Labor will offer its bipartisan support for the LNP’s mooted policy for a Chinese pogrom.

        Would that count as unanticipated ?

      • “Would that count as unanticipated ?”

        That specific series of events would count as unanticipated but I maintain that the (presumed) subsequent disappearance of foreign buyers wouldn’t be something that “no-one could have anticipated”.

        Although I’m sure plenty of the usual idiots would still use the phrase.

    • One of the weekend links recently had a report to the effect that the Chinese were looking at a second set of countries to hide their capital – that is , countries who hadn’t had Canada and Australia’s experience yet.

      • If I was a rich and corrupt Chinese official trying to hide money offshore I’d definitely try and avoid the popular hiding places.

        Not to mention the ones with extradition agreements with China.

    • ErmingtonPlumbingMEMBER

      We haven’t seen the half of whats about to occur when capital flight really gets going out of China.

      Millions of Chinese millionaires looking for a safe haven when China’s Debt bubble collapses.
      Just imagine, our economy being saved from the china bust, by a boom in millionaire Refo’s……Ha.
      Our Tone and Hockey wont be turning back those boats!.

      5 to 6 minutes in tells the story why we haven’t even seen the half of it yet.

  8. Apparently there were 1000+ Chinese spies here a decade ago. I wonder if any bother turn up to auctions in Glen Waverley to see how money is ‘laundered’ Oz-style or whether they’re part of the laundromat.

  9. So now this is out in the open, who is doing what about it in the government and why has it taken so long?

    What a disgrace this government is and the previous governments have been. Shame on them all for selling out first home buyers and families to foreign buyers to feather their own nests. Totally disgusting human beings.

    • I would have thought the best way to make sure your counterfeit money was checked thoroughly would be to deposit $5 million of it when you pay cash for a house.

  10. It is great Australia has their crime fighting resources focused on the big issues.

    Footballers getting caught on the nose-whisky in the off season – investigations, busts, pats on the back, media tut-tutting on red alert for ‘the children’

    Property industry facilitating 100s of millions of dirty money transactions – no bother – no headlines – just more Range Rovers getting leased – nothing to see here

  11. Forrest GumpMEMBER

    I understand the logic of the Chinese.

    They need to launder their money somewhere outside of China, that has few if any checks and preferably where it cannot be identified via the Chinese authorities and where they can also enjoy a good future.

    When you want to hide a zillion dollars of someone else’s money, you don’t care if you need to outbid another person by 10 or 20% of the asking price. Its irrelevant.

    Australia ticks all the boxes.

    • Yep and in my area (inner West Sydney) I see more and more older Chinese couples walking along the bay area with no grasp of English. My mail box is full of real estate brochures asking to evaluate my property (I rent) and telling me there is unrelenting demand for properties in my area.

      This has been going on for the past 2 years.

    • Same in Melbourne Gavin. FFS if the Government’s going to condone this, at least encourage the younger working age types rather than the geriatrics who couldn’t contribute even if they wanted to. Who pays for the high level of medical care?

      So much for immigration being the backbone of supporting our ageing society. From my regular observations it’s pouring fuel on the fire.

    • “They need to launder their money somewhere outside of China, that has few if any checks and preferably where it cannot be identified via the Chinese authorities and where they can also enjoy a good future.”

      Even if the Feds aren’t interested, all it takes is one state government to start looking at “unexplained wealth”.

      That generally means that the onus is on the person to prove the wealth was acquired legally, not for the government to prove it wasn’t.

      And you can probably guess where the unexplained wealth ends up if the accused can’t prove it was legally created…